Wednesday, December 17, 2014

The polls in Alberta as Wildrose implodes

Some momentous and unprecedented events are taking place this week in the Alberta legislature, as the province's Official Opposition splits apart. We will only know the scope of the implosion later today, but the latest reports suggest that leader Danielle Smith and perhaps half of her caucus will cross the floor and sit with the Progressive Conservative government. Wildrose may (barely) hang on to its role as the Official Opposition, but without their charismatic leader their future looks bleak.

But the polls have given little indication that Wildrose was on track for such a catastrophe.

Indeed, it seems the bones of contention may be more personal and related to Jim Prentice's new style, rather than any fear of crushing defeat. Based on what the polls were showing, the PCs would probably have prevailed in a snap election, but Wildrose would have remained as a strong opposition.

Let's take a look at the evolution of voting intentions in the province since the 2012 provincial election. The charts below are mash-ups of all the polls that have been publicly released since then, averaging them out when more than one appeared in a given month.

It really is a two-horse race in Alberta, as the Liberals and New Democrats have been polling some where in the teens for the last four years.

The Tories under Alison Redford had a bit of a honeymoon after the 2012 victory, leading in the polls until the end of the year, when Wildrose inched ahead. From then on until the fall of 2013, the two parties were in a close fight, swapping the lead depending on the poll. Between October 2012 and October 2013, the PCs averaged 34% against 33% for Wildrose.

But when things turned south for Redford, Wildrose stormed ahead, polling between 46% and 50% in March and April of this year. The PCs were at around 20%, and en route for disaster. Redford was out.

With Redford gone and Dave Hancock in as interim leader, the PCs slowly started to claw their way back. From 21% in April they went to 26% in June and 29% in September. They were still trailing Wildrose, but only by a handful of points.

When Prentice came in, the Tories moved ahead - narrowly so in October, and in more convincing fashion in the latest poll out of the province, that of Insights West (November 28-December 1). That survey gave the PCs 35% of the vote, against 29% for Wildrose, 16% for the NDP, and 15% for the Liberals. A series of by-election victories cemented the Tories' return to front-runner status, though also confirming that the PCs are not as strong as they were on election night in 2012.

That would, normally, be a good thing for the opposition. The PCs did hold on to their four seats, but with substantial loss of vote share. A repeat performance province wide would be a boon to the opposition parties. Instead, Wildrose took their four losses to incumbent Tories, two of which were high-profile, as a death knell. Recent events in the legislature simply further poisoned the well.

Defections are one thing. Wildrose has already lost some MLAs. But to have the leader cross the floor is something else entirely. How were the leadership numbers looking?

Smith's numbers were always enviable, and from December 2012 she consistently had better approval ratings than Redford and Hancock.

Redford's numbers were pretty good after the election, with an approval rating of between 43% and 58% throughout 2012.

But in December 2012, Smith's approval rating stood at 48%, and remained high throughout 2013. averaging 46% against 40% disapproval. By comparison, Redford's dropped to an average of just 32%, with 59% disapproving of her leadership.

Brian Mason and Raj Sherman, the NDP and Liberal leaders, roughly split the electorate three ways over this time, divided almost equally between those who approved of them, those who disapproved of them, and those who had no opinion. New NDP leader Rachel Notley still needs to be introduced to almost half of the population.

Redford's numbers fell significantly early this year, to an approval of just 20% between February and March. Her disapproval was a catastrophic 69%. Smith looked much better by comparison, and her approval rating soared to over 50% during this time.

Again, Hancock did his best to right the ship, with an approval rating of about 33% over his tenure (his disapproval rating was half of Redford's before she left).

Prentice has put up some good numbers since he took over, with an approval rating of between 45% and 50% in the three polls that have been published since he became premier. The latest, by Angus Reid Global (December 4-13), gave him an approval rating of 50%, with just 33% disapproval.

Smith's numbers have worsened of late, but they are hardly disastrous. She managed 44% in the first post-Prentice poll, with 38% disapproval. In the latest poll by Insights West, she was down to 38% approval, with 40% disapproval. While down from her Redford highs, those are still numbers she could have worked with. Her move can't be chalked up to an attempt to save her own skin.

It seems we will not know how Smith would have compared to Prentice over the long run. We will have to see what happens with the rump Wildrose caucus going forward. A merger, at this stage, seems unlikely.

With the most recent numbers from Insights West, Wildrose would have had a good chance of keeping its entire caucus in the legislature, with about 20 seats to 51 for the Tories and eight seats apiece for the Liberals and NDP.

But what if the electorate moves in the same way as the Wildrose caucus, with half going to the Tories? In that case, the Tories would win a landslide, with 76 seats to six for the NDP and five for the Liberals. Wildrose would be shut out. But those Liberals who went over to the PCs to block Wildrose in 2012 might revert back to their old party - not enough to change the government, but the Liberals would likely return to Official Opposition status in this scenario. It would likely be, though, a smaller and weaker opposition than the one Wildrose had - before today.

33 comments:

Dave Climenhaga, speaking of Wildrose : "In fact, their supporters were tougher than their leaders and could have made a good showing in the next election. But I guess winning by increments built up through hard work in opposition didn’t meet the schedule preferred by Ms. Smith and Mr. Anderson."

Danielle Smith and Rob Anderson routinely referred to the immorality, corruption and lack of principle of the PCs - that criticism was the impetus offered for the formation of Wildrose in the first place. And here we are. Thousands of Wildrose supporters gave money to the party because they believed it represented a real alternative to the PC, presumed to have fallen into political crapulence and corruption after decades in power. What happens to their investment now? Wildrose stands a good chance of no longer being the official opposition. And people who actively voted against the PCs now find their representatives in the heart of the beast.

Then again, the differences between the PC and Wildrose were always overstated, apart from the free reign given to the farthest right members of Wildrose. In many respects, nothing will change in alberta - at least until prople there realise that they need to make more significant chagnes than merely trading one set of team colours for another.

I agree with what you write above, the only thing I would add is the "free reign given to the farthest right members" was partly a reflection of the party and partly a reflection of the libertarian views of Danielle Smith.

The problem that created Wildrose has not gone away. The Tories are still a party long past their best before date, their track record is just abysmal. I had to laugh when I read in the "reunion" statement that the defectors and PCs were committed to keeping taxes the lowest in Canada, unfortunately unless you make over $90,000 BC has a lower tax rate than Alberta.

The health premium could be described as a tax but, I think it more rightly described as a fee. For people on the lower end of the income scale Alberta's 10% flat tax is double the BC rate. Including BC MSP fees Alberta would have a higher tax rate. Alberta also has a healthcare Insurance premiums at $63 per month under the Healthcare Insurance Plan.

As for the carbon tax unless your car runs on coal you pay 6.67 cents per litre.

Of course we also have a PST but, there are a host of singularly Alberta taxes as well such as school fees or neighbourhood improvement taxes. Then there is the tax to one's health imposed simply by living in Alberta; Currently lifer expectancy is 1 year less for men and women, this would represent a tax of $250,000 dollars.

You will be interested to learn Alberta also has a carbon pricing system on companies that fail to meet energy-efficiency targets. I am not certain whether it is a tax or a fine. On the face of it it appears to more closely resemble a fine but, if every emitter pays the levy than the effect would be similar to a tax.

Let's talk equalisation payments (and their predecessors). From the time of Confederation until the ‘60s and ‘70s, Ontario and Quebec paid for Alberta, BC and Saskatchewan, and with changing fortunes (in no small part due to policies of the current and previous federal governments) now require support for those provinces that they previously aided. Who would be so parsimonious as to not help one’s country-people and neighbours?

Of course, a major factor not being factored in is how Alberta counts on resource revenue to keep those personal taxes low. Alberta spends more per-person than Ontario, BC, or Quebec (found this via Canadian Taxpayers Federation) thanks to those massive revenues. The problem is unless oil starts climbing it is a house of cards that will collapse very, very soon. The PC's are smart to try to get ahead of it by first killing off Wildrose (their strongest opposition), then by trying to cut spending. They will also need to increase taxes, like it or not, unless oil jumps again as their budget would quickly fall apart.

An estimate of oil losses is around $7 billion a year immediately, and it could grow (via the Alberta premier). $9 billion is how much they made from royalties (21% of their budget) and until oil climbs you can bet a lot of jobs will be lost as well (thus more pressure on the budget). So Alberta could see as big as a 21% increase in personal taxes to compensate for the lost royalties. That won't happen of course, but a mix of spending cuts and tax increase will happen and it will be very, very painful.

Meanwhile expect Ontario to start climbing up thanks to a lower dollar (making manufacturing more competitive) and if oil stays low for a few years Alberta moving to have not status and Ontario moving out of that status (and the dollar in the 80 cent range).

Alberta has a revenue problem, they don't tax enough and consequently, they are always scrapping to fund hospitals or transit.

It is time to repeal S. 92A of the Constitution Act, 1867 and the Constitution Act 1930 (which may be ultra vires in any case) and give sub-surface resource rights back to its original and rightful owners-The people of Canada! Trudeau had no right to give away these resources to Alberta.

Alberta has a corruption problem, and a spending problem. Did you know that it costs Alberta 3 times as much to build those big electrical transmission towers than it does in BC? Even though BC has much more difficult and less accessible terrain?

Alberta is awash with waste and inefficiency. There's no lack of money. There's a lack of transparency and oversight, but there's tons of money.

Alberta has a revenue problem because its revenues are not stable, they are overly elastic to the price of oil. A $1 drop in the price of oil over 12 months decreases revenue by $215 million.

Yes Alberta does have a corruption problem electrical transmission towers are a prime example. There is a lack of transparency because no meaningful opposition exists and therefore the Legislative Assembly can not do its job.

Once is has enough money to fund its operations, any instability above that doesn't matter. If they reigned in their spending, they could just let the volatility of oil prices affect how big their surplus was. But it shouldn't ever touch their spending.

Alberta has high costs and currently doesn't pull in enough revenues to meet its "operations", hence, the Alberta penchant for deficit financing.

People like you assume Alberta could "cut spending" but, then forget about the sunk costs and required spending of government. The Canada portion of the Canada Health and Social Transfer is dependent on provincial spending, pensions need to be paid, Alberta has signed agreements, contracts etc... with a whole list of people, groups and organisations from the Metis to Enbridge that may impose additional costs if broken or reneged. Let us also not forget the reclamation and shut down costs of oil and gas production that fall upon Alberta if the proponent fails to clean up the environmental damage.

Sadly, Alberta would be unable to let the volatility of oil prices alone contribute to its deficit/surplus because oil and gas rents equal roughly 25% of their budget. In other words oil and gas rents pay for a large portion of operational spending. You write that oil rent funding "shouldn't ever touch their spending" but, they have financed their government through oil and gas rents for the past 50 years while at the same time cutting taxes less dependent upon oil prices. Today, Alberta simply can not finance itself without revenue (and lots of it) from oil and gas rents.

The "health premium" is absolutely a tax and in no way either a "fee" or "insurance". The government says you have to pay it regardless of whether you use the services it allegedly pays for minimally, extensively, or not at all. That alone makes it a tax. Fees are related to use of services. An example of an actual fee would be admission to the Royal BC Museum: if I choose to go to the Royal BC Museum I pay an admission charge which is a fee, but if I choose not to go to it I don't.

This "health premium" also has no connection with actual health premiums: it's supposedly term health insurance, but real term health insurance is not priced like that: its rates vary dramatically with risk factors such as age. If the government said "you have to buy health insurance, but you can choose whether to buy it from us or from the private sector" then it would be reasonable to call it a health insurance premium, but that's absolutely not what they say.

As a bonus, the amount of revenue raised by the Medical Services Tax (about $2 billion) has no relation to the amount the provincial government spends on health care (about $16 billion).

Calling it a "fee" or a "premium" is pure marketing on the part of the government. How to charge poor people a higher tax, not just relative to their incomes but in actual dollars (rich people are more likely to be married than poor people and married people pay a lower rate on this tax), pretend your tax rate is lower than it is, and have hardly anyone call you on it.

It could be a fee since, everybody will at some point use at least part of the Health system in some fashion.

Your writing on "health insurance" is a market based system, Canada has a single payer system and therefore rates do not need to vary by risk factors. Healthy people in effect subsidise the health care of the less healthy. It does have a connection with health premiums since, the system still incurs costs and collects revenues, the single payer system is just not as susceptible to shocks as a private market based system.

The idea that somehow fees are optional whereas, a tax is mandatory is just plain incorrect. Court fees for example are not optional and taxes are not absolute, they can be lowered by personal discretion-capital gains taxes for example are only payable when an asset is sold and can be mitigated through the claiming of capital losses.

The business-side of Wildrose was very badly run. They were remarkably inefficient at raising money, their internal communications were laughable, and their use of technology was antiquated.

The party, as a mechanism to achieve political goals, simply didn't work. And it wasn't likely to be fixed.

Had Wildrose won the last election, they likely would have immediately absorbed much of the staff and structure of the PCs, thus improveing their position tremendously. This is what happened to Reform when they absorbed a bunch of the staff and structure of the Ontario PCs when the Canadian Alliance was formed, and then shortly thereafter moved their head office to Ottawa (from Calgary).

As such, I'm not terribly surprised, nor do I think Albertans should be worried. Blind partisanship doesn't benefit anyone. No one should be supporting Wildrose simply because they are Wildrose. People should support Wildrose because they think Wildrose can improve Alberta in some meaningful way.

They spent roughly $0.80 to raise $1.00. Someone sold them on telemarketing as a strategy, and they invested heavily in that inefficient medium.

Lougheed never had an effective opposition. Did he not govern well? Ralph faced an effective opposition in only his first term. Ernest Manning was a terrific premier, and only twice in his seven majority victories did he have an official opposition at all.

Lougheed was the best of a bad lot. He failed to build a refinery or diversify the economy or tax base. He gets high praise for the Heritage fund but, the ease with which money can be withdrawn or not deposited shows its development was not properly thought through. From what I can gather royalty revenues haven't been added to the fund since, 1987. It's management also leaves much to be desired. Ideally, it should act as a hedge therefore allowing the fund to finance capital infrastructure projects is counter-productive and negates its ability to hedge.

When the market crashed Lougheed sure got out of Dodge quick. Lougheed and every other premier of Alberta's failure shared equally with the population is the failure to develop a mature political system. It's why today Alberta is headed for a very deep recession.

Ralph, frittered away a large surplus in the least efficient way possible. His dividend cheques created inflation not wealth.

Every single Alberta premier has totally failed their constituents and it is because Alberta lacks an opposition. Alberta premiers don't need to govern well because they have no fear of defeat. The result is the mistakes we see today in Alberta.

The provinces cannot create inflation. Inflation is merely a change in the money supply.

Ralph did fritter away what should have been a much bigger surplus, but he also created that surplus, and did so when oil revenues were very low. He deserves credit for that.

Alberta is not headed for a recession. At all. There will be no recession in Alberta. And even if there were, they have a long way to fall. The per capita GDP in Alberta is far and away the highest in Canada. The recession would need to be impossibly long and deep before another province approached its level of overall prosperity.

Firstly, inflation is not a change in the money supply, it is an increase in costs, primarily and specifically an increase in prices.

Yes Provinces can create inflation by increasing spending. Ralph's dividend cheques created inflationary pressure at a time when the economy was already roaring. Governments can increase inflation in others ways as well such as raising interest rates on bonds, increasing costs on citizens (through higher taxes for example) or increasing spending.

Ira, if you don't think Alberta headed for recession that is your business but, considering 80% of Alberta's economy is directly or indirectly related to oil in some fashion and oil prices have halved a recession is almost inevitable. A recession is simply a contraction in GDP for two consecutive quarters. Oil is a large part of Alberta's economy and it is worth less today than 6 months ago. It is nearly fantastical to assume that growth in other industries would off-set the drop in oil price.

The oil and gas sector alone represents 22% of Alberta's economy, roughly $62 billion in 2013. If we assume the industry elastic to oil prices then that industry today is only worth about $34 billion. That $28 billion drop represents roughly -10.5% of Alberta's GDP.

As for relative GDP it is quite possible Saskatchewan's per capita GDP will surpass Alberta's this year.

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